3 PLAYERS WIN U.K. LOTTERY

CANNES — Ending months of anticipation and speculation, the Arts Council of England has awarded three film production franchises to be funded by national lottery. The winners are Pathe Pictures, DNA Films and the Film Consortium.

In total, the three winners have promised to make 90 films over the six-year life of their franchises, with total budgets of £460 million ($736 million). Of that, £92 million ($148 million) will come from the lottery, with the remainder from conventional film-financing sources.

Pathe Pictures is led by French major Pathe, which owns British distrib Guild.

The group will take a 25% stake in the Sales Co. for international distribution. BMG Video has agreed to put up U.K. P&A coin, with theatrical distribution handled by Carlton Film Distributors. Bank financing comes from Cofiloisirs and Berliner.

The Film Consortium will be run by chief exec Kate Wilson, with Colin Vaines as head of production. It requested $49 million over six years to make 39 films.

DNA’s bid

DNA Films is the most radical winner. This bid consists only of two very high-profile British producers: Andrew Macdonald (“Trainspotting”) and Duncan Kenworthy (“Four Weddings and a Funeral”). U.K. distribution is guaranteed through Polygram, but that aside, the bid includes neither matching finance nor international sales.

They requested $47 million to make 16 films. It seems likely that financiers and sales companies that were involved in losing bids will now beat a path to their door to offer them deals. They now will have the advantage of negotiating from a position of strength, having failed to reach satisfactory agreements with financiers when trying to put together their bid.

Both the Film Consortium and DNA Films were widely tipped to win by observers, and their victory will prove popular even among many of the losers. The choice of Pathe Pictures came as more of a surprise, and is likely to attract more backbiting. Nonetheless, it will be a strong signal to European investors that the British film industry is keen to welcome them into U.K. filmmaking.

The Arts Council originally said it would award up to four franchises. Its decision to award only three probably reflects concerns about the damage that could be done to the British film economy by a too-rapid production boom.

Under the franchise system, the winners will have privileged access to the pool of lottery cash specified in their bid. But they will have to make individual applications for every project they want to co-finance with lottery money, and there is no guarantee they will receive it.

They can apply for a maximum of $3.2 million per movie, accounting for no more than 50% of the budget. The winners have all pledged that between one-third and half of their projects will come from producers not involved in their consortium.

The idea is that the franchise holders will develop into muscular mini-studios capable of standing alone without lottery support after the six years are up.

The new secretary of state for national heritage, Chris Smith, also announced that the Arts Council will now examine the possibility of funneling some lottery cash to support the distribution of British films, as well as the production.

He pointed out that British movies take only 10% of the U.K. box office, and he pledged to seek ways to increase that share to 20% “over the next few years.”